Community Bankers Association of Illinois
Community Bankers Association of Illinois    Community Bankers Association of Illinois CBAI E-Newsletter Sponsor - SHAZAM
     A Bi-Weekly News Bulletin for CBAI Members                            August 10, 2011 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • S&P Cuts U.S. Credit Rating for First Time
  • Fannie Mae Reports $2.9 Billion Second Quarter Loss
  • Fed Commits to Low Rates for Next Two Years
  • Opinion Piece: “The No-Pain, No-Gain Economy”
  • Pressure Mounts to Break Up Big Banks
  • Too-Big-to-Fail Firms Harming U.S. Economy
  • Visit to Washington Reinforces Support for Community Bank Initiatives
  • As Debt Crisis Ends, Tax Reform Talks Begin
  • Geithner Decides to Stay at Treasury
  • FHFA Completes RefCorp Obligation
  • Baker Market Update
  • Farm Updates on Land Prices and Corn Crop Outlook
  • Don’t Miss the Inspiring Keynote Speakers at CBAI’s 37th Annual Convention
  • Community Banking - Fueled by Loyalty: Get Your Motor Running!
  • New Classified Ads for Bankers Have Been Posted Online!
  • IRA Institute Set for August 23-24
  • Advanced BSA Institute Sscheduled for September 12-14
  • Tied to Cash: The Future of ATMs
  • ICBA Bancard Extends Agreement with FIS
  • Lender’s Guide to Mortgage Loan Compliance Set for 8/29–9/1

  • S&P Cuts U.S. Credit Rating for First Time

    Last Friday Standard & Poor’s trimmed the U.S. AAA credit rating to AA+ for the first time since 1941. In its announcement S&P stated, “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”
    See Article.

    Agencies Issue Guidance

    In response, the federal financial regulatory agencies jointly announced that the risk weights for Treasury securities and other securities issued by the U.S. government entities will not change. See Joint Release.

    CBAI Comments on Rating Downgrade

    In an August 8, 2011, Chicago Tribune article, CBAI’s Mike Kelley noted that the downgrade will likely have little effect on interest rates or loan decisions as community banks have ample funds for quality loans.

    S&P Also Downgrades GSE Credit Ratings

    In separate action on Monday, August 8, S&P also lowered the credit ratings of Fannie Mae, Freddie Mac, 10 of the 12 Federal Home Loan Banks, and the senior debt issued by the Federal Farm Credit Banks to AA+ from AAA. See S&P Announcement.

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    Fannie Mae Reports $2.9 Billion Second Quarter Loss

    Fannie Mae’s second quarter loss of $2.9 billion, although less than the $6.5 billion first quarter loss, reflects continued weakness in the housing and mortgage markets. Loan modifications to reduce defaults also contributed to the loss. Operating under government conservatorship, Fannie Mae also paid the U.S. Treasury $2.3 billion in senior preferred stock dividends.
    See News Release.

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    Fed Commits to Low Rates for Next Two Years

    By a 7-3 vote, the Federal Open Markets Committee approved a policy yesterday to keep target federal funds rates at the current low levels through mid-2013. The decision was based primarily on “considerably slower” than expected economic growth.
    See Release.

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    Opinion Piece: “The No-Pain, No-Gain Economy”

    Well-known financial advisor Rick Ferri believes pain will be at the center of this country’s economic growth for many years, and the solutions to right the troubled nation will hit the pocketbooks of every American. He predicts the reduction or elimination of college tax credits, deductions for charitable contributions, mortgage interest, and other popular write-offs.
    See Article.

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    Pressure Mounts to Break Up Big Banks

    A growing chorus of regulators, economists, and politicians are calling for the giant banks to be broken up, long a top priority for CBAI. Herb Allison, a former president of Merrill Lynch and former TARP executive, recently declared that the diverse operations of the mega banks should be separated into independent companies for the sake of shareholders, customers, and the general public.
    See Article.

    Meanwhile, the performance of the mega banks gives investors ample justification to support downsizing them. See Dealbook Article. In addition, presidential candidate Newt Gingrich stepped into the fray when he recently said, “How could the United States adopt a reaction to banks being too big to fail by making them bigger? I have a particular passion for getting back to a community-based, small-business based, local entrepreneurial system.” See Article.

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    Too-Big-to-Fail Firms Harming U.S. Economy

    The problem of "too big to fail" is continuing to bedevil the U.S. economy despite claims by some regulators that the Dodd-Frank Act effectively ended it.
    Read More.

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    Visit to Washington Reinforces Support for Community Bank Initiatives

    CBAI's David Schroeder, Vice President Federal Governmental Relations, visited Washington, D.C. recently to reinforce community bankers' grass-roots support for several important legislative initiatives. CBAI's 2011 Federal Policy Priorities include addressing excessive bank regulation and harsh regulatory examinations as well as supporting legislation which allows community banks to better serve their customers and their communities. Several bills have been introduced in the U.S. House of Representatives, and Schroeder encouraged every member of the Illinois Congressional delegation to support and co-sponsor this legislation.
    Read More.

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    As Debt Crisis Ends, Tax Reform Talks Begin

    From CBAI associate member Clifton Gunderson: Approved by Congress and signed by the president on August 2, the Budget Control Act of 2011 addresses the national debt but leaves tax reform on the table. Here is a
    look at some of the tax proposals that may come up in the months ahead.

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    Geithner Decides to Stay at Treasury

    Treasury Secretary Tim Geithner announced that he has decided to postpone plans to leave the agency just two days after the U.S. credit rating was downgraded by Standard & Poor’s. The last standing economic advisor in the Obama Administration, Geithner also has the task of dealing with another round of debt ceiling debates, looming sovereign debt troubles overseas, and implementation of Dodd-Frank rules.

    Geithner’s performance to date has received mixed reviews. The former president of the Federal Reserve Bank of New York helped draft some of the Wall Street reforms contained in Dodd-Frank. Just last month former FDIC Chairman Sheila Bair criticized key Treasury and Federal Reserve officials, including Geithner, for not doing more to correct the ills of Wall Street. She noted that Wall Street has returned to business as usual. Earlier this year Geithner also stated that the TBTF banks actually should be larger in an effort to diminish the argument that they are too cumbersome to be effectively managed and regulated.
    See Article.

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    FHFA Completes RefCorp Obligation

    The Federal Housing Finance Agency (FHFA), which oversees the Federal Home Loan Bank System, announced last week that the 12 FHLB District banks have completed their obligation to pay interest on Resolution Funding Corporation (RefCorp) bonds. The bonds were issued from 1989 to 1991 to help finance the resolution of failing thrift institutions.

    The FHFA also revealed that it has approved amended capital plans for all banks except Chicago, which is not currently operating under an approved capital plan but has recently submitted a new capital plan that is under review by the FHFA.
    See Release.

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    Baker Market Update

    Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected.
    Read More.

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    Farm Updates on Land Prices and Corn Crop Outlook

    Prime Farmland Prices Continue to Escalate

    According to Dale Aupperle, president of the Heartland Ag Group, farmland prices in Central Illinois have increased by 50% in the past 12 months which he described as the fastest pace in the last 40 years. He noted that more than half of the buyers are farmers, and most transactions are for cash. He said a combination of reasonable yields and high grain prices have helped fuel the demand for farmland. He concluded that he does not believe the rapid increase has caused a bubble that will collapse. However, CBAI notes that history reveals the inevitability of periodic market corrections, and sound underwriting standards are essential.

    Outlook Promising for Illinois Corn Crop

    DTN indicated last week that corn crops are substantially better than in 2010 despite the recent heat wave, and the yield potential is very good. See DTN Report.

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    Don’t Miss the Inspiring Keynote Speakers at CBAI’s 37th Annual Convention

    You won’t want to miss the keynote speakers at this year’s convention, “Community Banking: Fueled by Loyalty.” Scheduled for September 22-24 at the Hyatt Regency and Frontier Airlines Center in Milwaukee, this year’s convention is fueled by inspiration with two thought-provoking general session speakers. The Opening Breakfast Speaker is Mark Scharenbroich, National Speakers Association's Hall of Fame inductee and Certified Speaking Professional. Scharenbroich's new book, Nice Bike – Making Meaningful Connections on the Road of Life, shares powerful stories based on the three action steps of acknowledge, honor, and connect. Presenting the Closing General Session is Frank Bucaro, whose unique approach blends the serious subject of ethics with a humorous and high-energy presentation style. His presentation, “Good Company: Be the Company that People Want to Work For, Partner With, Invest In, and Buy From!,” shows how doing the right thing, at the right time, for the right reason is not only wise, it is profitable. Don’t miss out! Register today!

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    Community Banking - Fueled by Loyalty: Get Your Motor Running!

    Donate to the Community BancPac Silent & Live Auction on September 22 in Milwaukee, Wisconsin.
    See Details and Ideas.

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    New Classified Ads for Bankers Have Been Posted Online!

    The CBAI web site features classified ads for banking positions and other classified items. Posting is free to CBAI members.
    View Now. To post a classified ad, contact the CBAI Department of Communications.

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    IRA Institute Set for August 23-24

    CBAI will hold the
    “IRA Institute” in Springfield on August 23-24. Do you get an uneasy feeling in the pit of your stomach whenever a customer starts asking questions about IRAs? Do you know a little about IRAs but need more information? Would you have a hard time explaining the differences between a Traditional IRA and a Roth IRA? Would it be stressful for you to describe what a “Recharacterization” is to a customer? Have you ever looked at various IRA forms and not understood why the information that's being requested on them is necessary? Have you wondered if any of the rules have changed recently? If you answered “Yes” to any or all of the above questions, then this two-day institute is for you. This program begins with the basics and builds from there to an intermediate level. It is presented by instructors with combined experience of more than 50 years in the field; Randy J. Heidmann and James L. Spaniol, both consultants at Wolters Kluwer Financial Services.

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    Advanced BSA Institute Scheduled for September 12-14

    CBAI is pleased to offer
    “Advanced Bank Secrecy Act School,” a three-day institute offered in Springfield this September. This school requires you to take a critical look at a mythical bank fraught with BSA troubles. The class spends the three days of this school analyzing all aspects of the bank’s BSA program and making decisions to turn the program around in a six month time period through assignments that are completed in a group format using laptops, followed by guided general class discussion. While the class includes some lecture material, this course is designed to learn more about BSA by hands on analysis rather than relying on lectures discussing BSA theory. This course is not designed to teach the basic elements of BSA. The class will be most effective for those individuals who have a reasonable working knowledge of the BSA regulation. Leading this seminar is Bill Elliott, senior consultant and manager of compliance, of Young & Associates, Kent, OH.

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    Tied to Cash: The Future of ATMs

    For years, industry pundits have been forecasting the death of cash and characterizing it as a form factor that has outlived its useful life. However, according to the
    latest Federal Reserve payments study, U.S. consumers conducted six billion cash withdrawal transactions at ATMs in 2009 (an increase of 0.9% from 2008) with a total value of $647 billion (up 3.8% from 2008). That amounts to about 31 visits and $3,329 for every U.S. resident over the age of 17 during 2009. Clearly, despite many predictions to the contrary, cash is not going away and neither are ATMs. So the question, particularly with new fees being introduced in the wake of the Durbin Amendment, is: just what do consumers think about ATM fees and how do they influence their use and choice ATMs? Read Article.

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    ICBA Bancard Extends Agreement with FIS

    ICBA Bancard, the payment-services subsidiary of the Independent Community Bankers of America (ICBA), has extended its relationship with FIS™, the world’s largest provider of banking and payments technology, through a multi-year agreement. The relationship with FIS gives ICBA members the opportunity to offer their customers the common-sense credit cards and merchant products and services that are indicative of community banks.

    “Since we began working with FIS over 25 years ago, our community bank clients have realized benefits that have allowed them to either enter or stay in the credit card marketplace—an important move that keeps community banks competitive in the banking sector and allows them to serve the unique credit needs of their local consumer and business customers,” said Linda Echard, president and CEO of ICBA Bancard.

    The new agreement goes into effect immediately and includes flexible pricing options and state-of-the-art service level agreements. CBAI exclusively recommends ICBA Bancard for credit card issuing, agent card services, and merchant card programs.
    More Information.

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    Lender’s Guide to Mortgage Loan Compliance Set for 8/29–9/1

    CBAI is pleased to offer
    “Lenders’ Comprehensive Guide to Mortgage Loan Compliance,” a one and three-quarters day seminar offered in Springfield. During the last few years, Congress and the various federal regulators have crafted revisions to some of the regulations that have been a part of our lives for many years. Additionally, they have added additional regulatory issues to every mortgage loan transaction. As a result, lenders have been struggling to determine what they should do to assure not only that they make a safe and sound loan for the bank, but also that they do so in a manner that will not create regulatory problems for the bank. Topics covered include the SAFE Act, compensation issues, inquiry issues, application issues, processing and underwriting requirements, loan closing rules, and more. Leading this seminar is Bill Elliott, senior consultant and manager of compliance and Young & Associates, Inc., Kent, Ohio.

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    CBAI's 37th Annual Convention & Exposition
    Community Banking -
    Fueled by Loyalty!

    September 22-24, 2011 Hyatt Regency Milwaukee & Frontier Airlines Center

    Finer Points Blog





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